Philip O'Sullivan's Market Musings

Financial analysis from Dublin, Ireland

Market Musings 17/9/11

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Since my last update we’ve seen some heroics from the Irish team at the Rugby World Cup, co-ordinated central bank moves, a rogue trader and good news for Greencore.


Probably the biggest news this week was the announcement of co-ordinated central bank intervention by the Fed, BoE, ECB, SNB and BOJ to boost liquidity. In recent months there had been a number of unilateral moves by central banks (the Swiss monetary authority’s move to devalue the franc being one example) so it’s good to see the powers that be working together again. The markets welcomed this liquidity move, which is timely (and, let’s be honest, necessary) given the concerns around European banks.


News of a fresh rogue trader scandal emerged shortly after I finished writing my last entry. In a sign of the way things go these days, the suspect in this case already has a wikipedia entry and a number of fan clubs on Facebook! Disturbingly, his alleged actions go back as far as 2008, which if true raises obvious questions about UBS’ risk management systems and both its internal and external auditors. I was amused to see the ratings agencies, who are always the last to the party, suggest that they may downgrade UBS on the back of this.


We had the folly of Tim Geithner visiting Europe this week to lecture our political overlords, with no hint of irony, on how things should be done. I would concur with Juergen Stark’s comments.


I was drawn into a rather circular debate the other night about the provision of universal benefits in Ireland. We have a situation here where roughly half of the Irish population is in receipt of at least one social welfare payment. Is it any wonder that the total social welfare budget for 2010 (€13.2bn) was more than the government’s total income tax take (€11.3bn)? At a time when the State is teetering on the verge of bankruptcy, we simply cannot continue to support a system where people can qualify for benefits regardless of their means.


(Disclaimer: I am a shareholder in Uniq plc) Turning to corporate news, Uniq released its last-ever set of interim results yesterday. It will shortly be taken over by Irish-headquartered Greencore plc. Shareholders in the latter should be pleased with the strong performance by Uniq’s food-to-go unit, which is the area of most overlap with Greencore’s operations.


Speaking of plcs, Expecting Value had a great blog piece on Barratt Developments, which I’d encourage you to take a look at.


Finally, what an amazing win for Ireland in the Rugby World Cup today! I think it’s only fitting that the last word should go to Ronan O’Gara – it really is “a great day to be Irish”.


Written by Philip O'Sullivan

September 17, 2011 at 5:50 pm

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